China and the World of Business • China Business and the World

The FT is reporting (from Geneva, mind you) that China has passed Germany in patent filings, becoming the world’s fifth largest source of patent filings, a 700% increase in 10 years. Factor out the patents filed by foreign companies, and you’re still left with a 350% increase. That’s a significant increase in patent activity by any measure.

It’s a positive sign in that it represents a growth in China’s intellectual property. That is bound to be a good thing for the future of IPR protection in China – one tends to be more enthusiastic about IPR protection when one has skin in the game.

Of course, these are filings. There is no discussion of the quality of those applications, or the patents actually granted, or how many of those applications are, um, highly derivative of innovations from elsewhere.

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Andrew Lih, who is writing a book about Wikipedia, has done a superb article covering the quietly improving situation of Wikipedia access in China, a fact that has resulted in much rejoicing here in the Hutong.

I still wonder – how much of the blockage was content-related, and how much of it was a bald-faced attempt to give Baidupedia some traction in the market?

Protectionism comes in many guises, perhaps even wearing the fig-leaf of censorship.

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And while we’re on the subject of access, a significant story of blockage that never gets covered is why I can’t access sites like www.army.mil (The U.S. Army), www.defenselink.mil (The Pentagon), and www.d-n-i-net (Defense and the National Interest, a superb blog on national security.) They all work from Hong Kong and Singapore.

However, I have a sneaking suspicion that the problem is not The Great Firewall of China, but an indicator of a small, growing movement of websites that block Chinese IP addresses.

Care to comment, Mr. Rumsfield?

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In one of those wonderful little coincidences, I had just read a series of articles by Dan Harris in The China Law Blog (if you don’t read it, why the hell not?) about the dangers of reliance on guanxi when doing business in China. Frankly, I find all of Dan’s points spot on.

So in one of those juicy moments of irony that only an RSS reader could make possible, five minutes later I was reading an interview by Sean Silverthorne on Harvard Business School’s Working Knowledge site. Sean was speaking to Harvard lecturer Dan Isenberg about a one week trip that nine Harvard faculty members made to China in June to learn about, among other things, entrepreneurship in China.

The article concluded with Sean asking Professor Isenberg about what advice he would give to readers thinking of creating new businesses in China. Isenberg’s response?

“Go there now. When there, listen, observe, learn. When you are ready to do business, form a network of trusted insiders to help you get things done there.” [emphasis added]

Loose translation – Harvard Business School says use guanxi.

After coming back all starry-eyed and breathless from a one-week trip, you can hardly blame them for reaching superficial conclusions. But I mean, really, is this what the cream of the world’s future business leaders is learning about business in China?

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And while we’re on the subject of that esteemed institution of higher learning, it’s worthy noting a recent Richard Tomkins article (thanks, Fons) that Harvard labor economist Richard Freeman recently gave a paper at the Federal Reserve Bank of Boston noting how quickly China is moving up the technological ladder. As evidence, he cites the fact that over 750 multinational firms have set up R&D facilities in the PRC.

Yes, they have, and some of those facilities actually do meaningful R&D. But how many are just there for the government relations value, and how many are just localizing product versus doing basic research and genuine development? There are plenty of the latter, but nobody knows how much of the former is out there.

On the other hand, why ask about the value of the statistic when quoting it will do nicely?

Unfortunately it’s that kind of loose play with numbers that could lead to overestimating exactly how far China has come technologically, and coming from a credible source like Dr. Freeman and the Boston Fed, such an overestimation would have repercussions in board rooms and hearing rooms around the U.S.

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